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Being able to match a trader’s individual personality and strengths with a specific technique, is perhaps the best way to begin day trading, in that it can vastly increase a trader’s chances of success.

Day trading is the practice of buying and selling financial instruments, such as securities, within the same trading day. Traders who practice day trading are called active traders or day traders. This field used to reserve for financial firms, fund mangers, investment firms, and banks. With the advent of electronic and online day trading, however, it has become accessible to almost anybody interested in the practice.

Strategies Used In Day Trading

As you can well imagine, there are nowadays a variety of strategies and techniques being used by active traders in order to ensure they can benefit financially. These include:

News playing, Trend following, Rebate trading, and Contrarian investing

Contrarian investing is the day trading strategy that follows the ideology that assumes that financial securities that have been steadily rising will later on reverse and fall. The opposite view is applied to already falling securities.

News playing, as the name suggests, is the technique of buying and selling securities based on news released by the company.

Rebate Trading is a trading strategy that uses ECN rebates as its primary source of income. This strategy usually involves purchasing low priced securities in large volumes.

Scalping involves establishing and liquidating a security quickly – often within seconds of minutes of each other. The goal of scalping is to gain profit from the small price gaps that occur immediately after purchase.

Trend following is basically the opposite of contrarian investing, in that the strategy is based on the principle that securities which have been rising steadily will continue to do so, while those securities which have been falling steadily will continue to fall.

Other well known day trading strategies include the likes of ‘short sells’ and ‘range-trading’.

Determining What The Best Strategy Is

It is estimated that up to 80% of day traders loose their available capital before they are able to learn the strategies that can help ensure success. It is therefore important to tread lightly and take smaller risks when starting out. It is also important to find the right strategy or strategies that earn the trader the most profit. Below are tips on finding the right day trading strategies.

Match the right strategy with the right trader – It is important to match the trader’s personality, strengths, comfort level, and investing freedom with the right strategy. Those who are less inclined to take risks may benefit from scalping, news playing and rebate trading. Risk takers on the other hand may have no problem using trend following and contrarian investing.

Starting mall and treading lightly – newcomers in particular should start out slowly by making small investments, as this will afford them an opportunity to learn about the different advantages and disadvantages regarding the different strategies.

A day trader may also benefit from using more than one strategy at a time. In example, the trader can invest a majority of the capital using low risk strategies such as scalping and rebate trading. At the same time, a portion of the capital may be used to high risk, high yield strategies like short

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